Rental Property Investor · San Anselmo · Member since 2015 · 659 posts · 599 votes
For those that have mobile home park experience did you go directly through the listing broker, or bring in your own broker/consultant? I am new to this segment, and it seems like the listing brokers are incentivized by taking both sides. On the residential side, a realtor has a fiduciary duty to act in their clients best interest. Is this similar in the commercial/mobile home park arena?
If you do bring in your own broker/consultant, what is your criteria and search pattern in a market you are not familiar with?
Very good question OP, I would be interested in learning your thots also. Getting the popcorn. . .
Haha! I have strong feelings on the topic of bringing in your own agent on the residential side of RE. It's obviously a gamble when you deal directly with the listing agent as they are "making best attempt" to share their fiduciary duties. The gamble can definitely pay off because the agent is incentivized to sell to you, because they get both sides of the commission. Perhaps you can even write the offer a little bit lower and ask the L.A. to lower his commission a few points. I do this quite often but don't suggest it to others simply because of the increased risk factor.
Whats your take on this from a mobile home park perspective?
I do think the increased due diligence period on a commercial property like a MHP may smooth out some of the associated risk of a dual agency simply because you have time to do great due diligence/inspections/underwriting......But thats just a guess.
Commercial Real Estate Fund Manager · Lynchburg, VA · Member since 2015 · 1k+ posts · 1k+ votes
5y
Hi @Justin R.. Great question. This puzzled me when I moved from residential to commercial as well. The rules in the commercial realm are totally different from residential. For one, most brokers have exclusive listings. Meaning they get the seller side and the buyer side. You may ask: "What if I bring my own agent?" They may reply: "Then you pay them. I get all of this commission."
There are other rules. For example, they only present the offers they want to. And they encourage their seller to take the offer that is most likely to close, not the highest offer in some cases.
Real Estate Broker · Portland, OR · Member since 2019 · 4k+ posts · 2k+ votes
5y
Welllll, listing brokers, especially commercial will fight to keep both sides of the deal. In OR/WA they'll co-op, but do everything they can to show the superiority of a non co-op deal to the seller.
I guess ask and say you have an agent you want to work with and see what the listing agent says.
Specialist · Scottsdale, AZ · Member since 2014 · 626 posts · 700 votes
5y
@Justin R. there are variables in every transaction, so the answer to your question is not that simple. If you are acquiring a large park, especially if you intend to use agency debt, you would be better off to have an experienced attorney (who is extremely familiar with MHPs) than an broker. There are too many variables that exist on a transaction like that which will require legal work, and which a broker will not really be able to provide any value.
However, if you are acquiring a smaller park with cash, seller financing, or traditional bank financing, that level of legal work will not likely be required. In that case, bringing a broker in on your side could be of value, particularly if you are not familiar with parks and all the nuances that need to be paid attention to. They can assist you with understanding the upside in the deal and underwriting what it could be worth on the back end, as well as assisting you with your presentation to the right banks, as they should be familiar with the space. With that said, if you engage with a broker, make sure they specialize in MHPs, or you could be wasting your time and likely to get poor advice.
For more experienced park owners, working with the listing broker will make the most sense, for a host of reasons. First of all, the listing broker doesn't really want to share his commission with anyone else, so if you agree to work with them, they may have room to reduce their commission and still make more than if you had brought your own broker. Second, it reduces the filtering that could take place between the brokers and you are getting it straight from the horses mouth. Better yet, a good relationship with the listing broker may grant you the freedom to work directly with the owner, eliminating all the filters. IMHO, working directly with the seller is the best scenario and is always my goal.
With all that said, if you are not experienced in parks, you will want quality guidance so you don't get into a bad deal and the best candidates to assist you would be an experienced MHP broker, attorney, or here is a gem for you...another local MHP owner. Don't forget that building a relationship with a park owner in your area could be the best asset you could have. They can be a neutral party and give you valuable perspective that a broker or attorney cannot, since they rarely are park owners themselves. Consider offering a consultation fee to a local park owner and that could be the best strategy for you as you get started.
Hi @Justin R.. Great question. This puzzled me when I moved from residential to commercial as well. The rules in the commercial realm are totally different from residential. For one, most brokers have exclusive listings. Meaning they get the seller side and the buyer side. You may ask: "What if I bring my own agent?" They may reply: "Then you pay them. I get all of this commission."
There are other rules. For example, they only present the offers they want to. And they encourage their seller to take the offer that is most likely to close, not the highest offer in some cases.